Investor Education Survey Results

Thank you to the almost 500 of you who completed our online investor education survey providing useful guidance around a range of topics, and lots of very helpful comments around the possible content and delivery of investor education initiatives. For those of you that asked us some specific questions (and there were quite a few!) we are in the process of getting back in touch with you; if you had a query and haven’t heard back from us by the end of May please make contact again.

Below is a summary of the survey results and an outline of our proposed next steps (just click on the graphs to see them in a better size).

Preferred ways of learning

There was significant interest in delivery via online, kanohi ki te kanohi (face to face) and via written media such as Te Pānui Rūnaka.

Based on this feedback we’ll be delivering across all of these media, starting with online material which we hope to have available in June/July. Once we have had feedback and are confident the material covers all the right bases, we’ll make it available via TPR and/or by direct mail. After that we’ll work on face to face delivery.

Topics to be covered

There was significant interest in all the areas suggested (see graph below) and we’ll make sure all these areas are covered.

In addition to the topics listed there was also significant interest in workshops on Home ownership. We have material available online regarding home ownership and are currently looking at ways to also deliver this around the motu, probably in separate sessions from the investment ones.

Future investment choice options for Whai Rawa

It was good to see the strong interest in future Whai Rawa investment choice (see graph above and table below). This feeds into the work currently being done by Whai Rawa Fund Limited mapping out the possible change process and timelines around providing investment choice. While it has always been anticipated that investment choice in Whai Rawa would become available, undertaking such a change is a significant project in its own right, and any change is unlikely to be completed before 2016.

If Whai Rawa was to offer a range of investment choices, which of the following would be your preferred type of investment fund(s)?

Response

Cash (low risk) – bank and other fixed interest investments

5.0%

Conservative (medium to low risk) – a high proportion in bank deposits and fixed interest investments and a lower proportion in growth assets such as shares and property

11.0%

Balanced (medium risk) – a more equal split between higher risk growth assets such as shares and property and more stable investments including fixed interest and bank deposits.

21.0%

Growth (medium to high risk) – a high proportion of shares and property with a lower level of band deposits and fixed interests.

14.5%

Aggressive (high risk) – Mainly shares

2.4%

A combination of types

31.7%

Don’t know

14.5%

We also received quite a few comments, questions and suggestions around current and future investment options and we’ re following up with respondents on all of these. A few key ones are outlined below.

“I need to know more about those advising Whai Rawa”

As part of its role, Whai Rawa Fund Limited (WRFL) is responsible for determining the appropriate level of risk when investing member funds and amongst the board members there is extensive experience in investment management. Currently Whai Rawa has a conservative investment strategy designed to be relatively low risk compared to a strategy that would see us in a growth or balanced fund likely to generate higher returns but with higher risk.

WRFL have appointed Mercer as investment manager. Mercer are known as a ‘manager of managers’ meaning they appoint a range of specialist managers to invest funds (in Whai Rawa’s case, in line with the conservative investment strategy). Mercer provide us with monthly and quarterly reports on the performance of the investments.

” I’d like Whai Rawa to invest in Ngāi Tahu business”

Some respondents indicated an interest in Whai Rawa investing in Ngāi Tahu businesses. This option will be considered but there are likely to be constraints on our ability to do this, including legislation such as the recent Financial Markets Conduct Actthat puts obligations on those managing funds to ensure they are appropriately diversified. As we progress through this work we’ll keep you up to date with the discussion and get your feedback.

Financial knowledge questions

We included some standard questions used internationally to ascertain overall levels of knowledge. This helps us compare levels of knowledge (amongst the same group of respondents) before and after our investor education campaign; one way of helping us work out whether we did a good job.

Question 1 – Compound Interest

Close to 2/3 got this one right, the answer being more than $104. Assuming the interest was calculated once a year, after one year there would be $102 and a year later there would be $104.4. Okay so it’s not much more in this case but it hints at the power of compound interest over a long period of time.

Question 2 – The power of inflation

The next knowledge question was about the power of inflation and 70% of respondents got this one right. Basically if the rate of inflation is higher than the rate of return on your savings, then the purchasing power of your money (what it can buy) decreases.

Question 3 – Diversifying investments

Over 80% of you already knew it’s usually riskier to invest in just one thing than in a range of investments. That’s partly why a lot of people were so badly hit in the recent collapse of the finance companies. They thought they were diversifying their investments by investing in a range of companies but because most of those finance companies were heavily involved in risky property investment they were all exposed to the same sort of risk. This wasn’t the only factor of course, the level of risk of was hidden by the relatively low returns (only a little bit higher than bank deposit rates), and many financial advisors were promoting them as a good option.

Conclusion and next steps

With the help of some funding from JR McKenzie and the Lottery Grants Board we are currently developing a resource specifically for Maori that covers a lot of these more basic financial education areas in a way that’s accessible to all. Watch this space.

Thanks again for helping us out by taking part. Please get in touch if you have any questions regarding any of this.

And congratulations to the 5 winners of the survey promotion who won $100 into a Whai Rawa account of their choice. For those of you who didn’t win, you are in the draw for our other competition provided you are a Whai Rawa member.